Dear Editor,
I’ll start off by saying that I have seen the advertising flooding Facebook and other social media and they are indeed very alluring. Who wouldn’t want to get rich quick without trying and all from the comfort of your very own home with just a few clicks? Some might actually be tempted enough to ‘invest’ their hard-earned money in these hard times to their own detriment possibly.
So will these FOREX trading opportunities give you untold riches or are they simply a pyramid scheme? I’ll try to explain simply without the complicated textbook definitions that are used to convince people one way or the other. I decided to write this because I see many of my friends falling prey to this scheme and many I know are honest individuals who work hard, save and are simply looking to make some extra money and to ‘save for the future’.
First off, pyramid schemes are a scam. They are marketed as being very legitimate and offering great opportunity but they are simply ‘rip-offs’. So what should you be looking for? Well let’s identify some red flags:
1) Those who are the promoters of a pyramid scheme try to recruit new persons by enticing them with messages of what they will be able to earn. Some of the appealing pitches would include, “change your life and work from home”, “leave your job and be your own boss”, “get financial freedom”. If you’ve seen such messages being used as the primary marketing attraction then it is likely a pyramid scheme with promises that are too good to be true.
Pyramid schemes are created in such a way that they need a constant supply of new participants and of course their ‘money’ to keep the business flowing and they do so through ‘out of the world’ promises’. Your income would not mainly be based on the selling of a product (FOREX) but on how many people you are able to recruit.
Ask yourself: Is the scheme you’re investing in giving the vast majority, if not all of your income, through your ability to attract other people? If so, then chances are it’s a pyramid and a scam.
2) Pyramid schemes often offer extravagant rewards and bonuses for ‘investors’/participants who are able to meet certain goals such as bringing in a number of new recruits or attending a certain number of trainings and advertising these to bait the unsuspecting.
Ask yourself : Is the scheme you’re investing in giving higher rewards or so-called bonuses based on the number of new persons that you are able to bring in and attaching fancy marketing names and levels to that number such as ‘Diamond’, ‘Platinum’, ‘Crown’, ‘Conqueror’? If so, then chances are it’s a pyramid and a scam.
3) Pyramid schemes usually require repeated fees for such things as so-called ‘training sessions’ or expensive marketing materials.
Ask yourself: Is the scheme you’re investing in charging ‘fees’ for training sessions and other materials? If so, then chances are it’s a pyramid and a scam.
4) Pyramid schemes play on emotions and generally use ‘high-pressure sales tactics’. You will hear such lines as ‘act now or you’ll lose the opportunity to work from home and gain financial freedom’. The ploy is to encourage emotional buying and reduce the time you take to research the scheme.
Ask yourself: Is the scheme you’re investing in using such marketing lines? If so, then chances are it’s a pyramid and a scam.
5) Pyramid schemes require new investors to pay a fee for the right to sell the products to others or in other words pay a fee for the right to recruit others into the scheme so as to gain rewards/income for bringing more people in and not rewards/income related to the actual product sales (FOREX).
Ask yourself: Is the scheme you’re investing in requiring a fee for the right to recruit others? If so, then chances are it’s a pyramid and a scam.
6) Pyramid schemes under the guise of FOREX traders do not have actual brokers who are the promoters of the scheme. Therefore, the person who brings you on to the scheme is not a broker who can actually trade and chances are that the company you are signing up with is not a broker either. This means that all trades will be done through someone else; not the person who brings you on or the company you are joining with.
Ask yourself: Is the person bringing me on to the scheme or the company I’m joining up with a broker? If not, then chances are it’s a pyramid and a scam.
7) Pyramid schemes do not have regulatory clearance.
Ask yourself: Does the scheme have regulatory clearance and has the Guyana Securities Council given authorization? If not, then chances are it’s a pyramid and a scam.
8) Pyramid schemes usually defend themselves by claiming to be Multi-Level Marketing (MLM). MLM is basically a method of selling products directly to consumers without the in-between ‘retailer’. The products are sold through a network of salespersons and when the MLM is set-up, it resembles that of a pyramid with each salesperson recruiting and training additional salespersons to earn commission on others they get to join on. The pyramidal structure of MLM companies allows many pyramid schemes to be passed off using this fancy name but there is a distinct difference between the two.
Ask yourself: Does the scheme you’re investing in pay you based on your actual product sales to customers without you having to recruit new customers so as to earn income or is your income primarily based on how many people you recruit? If it’s primarily based on the number of persons you recruit then chances are it’s a pyramid and a scam.
9) Pyramid schemes tend to involve the sale of products (in this case FOREX) through salespersons so as to show legitimacy. This is, however, a mere smokescreen that is done simply to sidestep the regulatory bodies and attempt to show that the potential for profit stem from the sale of products and not from recruiting other investors. This allows them to claim that they are not a pyramid scheme but rather an elaborate Multi-Level Marketing company. The bottom line is that if the majority of your income comes from the recruiting of new investors rather than the sale of the product itself (FOREX) then it is a pyramid regardless of the explanation.
Ask yourself: Does the majority of your income come from the recruiting of new investors rather than FOREX trading? If so, then chances are it’s a pyramid and a scam.
10) Pyramid schemes usually offer products of little or doubtful value that serve as a simple tool to promote the scheme while the real value lays in recruiting new persons.
Ask yourself: Is the product being offered of doubtful value? Is the income derived from trading FOREX little and in most cases doubtful? If so, then chances are it’s a pyramid and a scam.
As a note; FOREX trading in itself is not illegal and not a pyramid scheme. However, it is not the trading of FOREX that is the issue but the requirement for you to recruit others or pay monthly fees if you want to learn from certain persons. When your income is primarily through the recruiting of others then you have moved away from FOREX trading and entered the realms of a pyramid scheme.
Yours faithfully,
Terrence Jaskaran
